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London open: Stocks edge up despite gloomy consumer confidence survey
London stocks edged higher in early trade on Monday despite the release of a gloomy consumer confidence survey, as investors continued to eye developments in the Ukraine conflict.
At 0900 BST, the FTSE 100 was up 0.2% at 7,549.93, taking its cue from a positive close on Wall Street at the end of last week,
Richard Hunter, head of markets at Interactive Investor, said: “The generally positive baton has been passed to the UK in early trade following decent performances for the most part from the US and Asia, with the FTSE 100 consolidating its status as an outperformer this year.
“The index is now ahead by 2.5% in 2022, continuing to ride the wave of overseas institutional buying interest given its perceived attractions on both defensive and valuation grounds.
“The conflict between Russia and Ukraine continues to engender a split between hope and despair. Reports of some progress in talks aimed at ending the war continue to be offset by further reports of Russian atrocities which have seemingly strengthened the resolve of other nations to ratchet up sanctions once more.
“The oil price has shown some recent weakness after the actual and potential release of further supply, alongside a truce in Yemen, although even allowing for this dip the price is still ahead by 36% so far this year.”
Despite the positive tone, gains were unspectacular amid news the EU is preparing to impose further sanctions against Russia following reports that its troops executed unarmed civilians in Ukrainian towns.
A grim consumer confidence survey from PwC also didn’t help. It showed that confidence suffered its biggest fall in March since the financial crisis of 2008 as worries about inflation and disposable income took their toll.
The consumer sentiment index declined to -20 after peaking at +10 in June last year. This 30-point drop in nine months marks the biggest sustained fall since the financial crisis, although the index remains higher than it was at the start of the pandemic, when it stood at -26.
This time last year, the index stood at +8 amid the prospect of lockdown easing.
The survey showed that spending expectations on going out and eating out have dropped significantly, with both categories now the lowest. Meanwhile, holidays and fashion spending have also seen substantial falls since last Spring.
Grocery shopping was the only category where people expect to spend more, rather than less in the next 12 months. However, this is likely to be driven almost exclusively by inflation, rather than specifically heightened consumer demand.
The survey also found that sentiment has fallen in almost every age group, but the gap between the most and least optimistic is wider than ever.
Lisa Hooker, consumer markets Leader at PwC, said: “The shift in sentiment is both significant and sudden. Whilst there is still some post-Covid recovery, spending expectations on eating out and going out have plummeted as consumers look to tighten their belt as they face up to cost of living pressures. Even after the extensive travel disruption over the last two years, holiday spending is not immune and will consumers prioritise their main holiday over other breaks, like we saw during the global financial crisis?”
In equity markets, Endeavour Mining rose after saying it was set to start construction of the $290m expansion of its Sabodala-Massawa gold project in Senegal.
Elsewhere, B&Q owner Kingfisher rallied after an upgrade to ‘buy’ from ‘hold’ at Deutsche Bank, while Just Group surged to the top of the FTSE 250 after an upgrade to ‘overweight’ at Barclays. The bank said management’s targeted new business margin and strain are achievable.
On the downside, BA owner IAG and budget airline easyJet were both lower after saying they had been forced to cancel dozens of flights due to Covid-related staff absences.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bae Systems Plc | +2.58% | +18.40 | 732.20 |
| 2 |  |
Kingfisher Plc | +2.48% | +6.40 | 264.50 |
| 3 |  |
Rightmove Plc | +1.98% | +12.60 | 647.60 |
| 4 |  |
Hargreaves Lansdown Plc | +1.65% | +16.30 | 1,001.50 |
| 5 |  |
Sainsbury (j) Plc | +1.33% | +3.30 | 252.20 |
| 6 |  |
Smith & Nephew Plc | +1.19% | +14.50 | 1,228.50 |
| 7 |  |
Hikma Pharmaceuticals Plc | +1.13% | +23.00 | 2,062.00 |
| 8 |  |
Fresnillo Plc | +1.02% | +7.60 | 751.00 |
| 9 |  |
Coca-cola Hbc Ag | +0.99% | +15.50 | 1,585.00 |
| 10 |  |
Astrazeneca Plc | +0.95% | +96.00 | 10,172.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | -1.98% | -11.00 | 544.00 |
| 2 |  |
International Consolidated Airlines Group S.a. | -1.33% | -1.88 | 139.30 |
| 3 |  |
Micro Focus International Plc | -1.28% | -5.20 | 400.70 |
| 4 |  |
Intercontinental Hotels Group Plc | -1.17% | -60.00 | 5,090.00 |
| 5 |  |
Wpp Plc | -1.15% | -11.60 | 994.40 |
| 6 |  |
Burberry Group Plc | -0.99% | -16.50 | 1,657.00 |
| 7 |  |
Aviva Plc | -0.90% | -4.00 | 440.60 |
| 8 |  |
Standard Chartered Plc | -0.86% | -4.40 | 505.40 |
| 9 |  |
British Land Company Plc | -0.80% | -4.20 | 520.80 |
| 10 |  |
Hsbc Holdings Plc | -0.76% | -4.00 | 524.90 |
Europe open: Shares edge ahead as traders eye Ukraine war
European shares crept higher at the opening on Monday, following a positive session in Asia overnight with investors monitoring the Ukraine war after evidence of alleged war crimes emerged over the weekend.
The pan-European Stoxx 600 index was up 0.15%, with all major regional bourses following suit.
Germany on Sunday said Western nations would agree to impose more sanctions on Russia, with the country’s defence minister saying the European Union must discuss banning the import of Russian gas.
Ukrainian troops have taken over areas surrounding the capital Kyiv as the Russians withdrew in recent days. Footage emerged from the town of Bucha showing bodies of shot civilians lying dead on the street, some with their hands tied behind their backs.
There was little corporate news to drive the market as traders pause for breath ahead of first-quarter figures from companies.
“Expectations are relatively low as compared to normal standards, although a small hike in revenues and profits is generally expected across the board,” said Richard Hunter at Interactive Investor.
“The recent Omicron variant may have had an impact in certain sectors, which in turn may have crimped corporate performance. On the other hand, recent results have suggested that companies on both sides of the pond which had cautiously been hoarding cash and cutting costs during the pandemic are now able to loosen the purse strings.”
“This could result in the announcement of further dividend hikes and share buyback programmes, while from a broader perspective the resumption of brisk merger & activity cannot be discounted.”
In equity news, shares in Delivery Hero soared as the company launched a debt financing syndication equal to €1.4bn to bolster its liquidity position.
The proceeds from $825m and €300m term facilities, which have a maturity of 5.25 years, would also be used for potential refinancing of convertible debt at maturity, working capital and guarantees, among other general corporate purposes, said the German takeaway company.
Shares in budget airline easyJet fell slightly as the carrier cancelled around 100 flights due to a spike in Covid cases among staff.
US close: Q2 trading starts off on a positive note
Wall Street stocks ended the session in the green on the first day of Q2 trading as investors thumbed over March’s all-important nonfarm payrolls report.
At the close, the Dow Jones Industrial Average was up 0.40% at 34,818.27, while the S&P 500 was 0.34% firmer at 4,545.86 and the Nasdaq Composite saw out the session 0.29% stronger at 14,261.50.
The Dow closed 139.92 points higher on Friday, reclaiming some of the previous session’s losses after the US president confirmed plans to start daily releases from the country’s strategic oil reserves.
In focus on Friday was news that the UK will reportedly join the US in releasing more oil from its reserves as part of a joint effort to lower prices and reduce reliance on Russian supplies. According to Bloomberg, an announcement was likely to come via the International Energy Agency. However, sources declined to say the size of the release, citing market sensitivity and the need for countries to act in concert.
US president Joe Biden said on Thursday that his plans to release 1m barrels of oil a day for six months would lay the foundations for the US to achieve energy independence from foreign suppliers. He also said that he expects allies to release as many as 50m barrels from their own stocks.
Also drawing an amount of investor attention, the two-year and 10-year Treasury yields inverted for the first time since 2019, a potential sign that the US economy was headed for a recession. However, the inverted yield curve can not predict exactly when a recession will occur, with history indicating it could be over a year away.
On the macro front, the US economy added 431,000 payrolls in March, according to the Bureau of Labor Statistics, down from the previous month’s print of 750,000 and falling short of market expectations for a print of 490,000. Job gains continued in leisure and hospitality, up 112,000, professional and business services, 102,000 higher, retail trade, 49,000 stronger, and food and beverage stores and manufacturing, up 18,000 and 38,000, respectively.
Figures for February were revised sharply higher to show a 750,000 gain, up from 678,000, while the change in total nonfarm payroll employment for January was also revised up by 23,000 to 504,000.
Elsewhere, the ISM‘s manufacturing PMI fell to 57.1 in March, down from 58.6 in February, well below market forecasts of 59 and pointing to the slowest growth in factory activity since September 2020.
Finally, construction spending in the US increased 0.5% month-on-month to a seasonally adjusted annual rate of $1.70trn in February, cooling off from an upwardly revised 1.6% advance in January but below market expectations of a 1% gain.
No major corporate earnings were released on Friday.
Monday newspaper round-up: EasyJet, Motor Fuel Group, consumer confidence
Britain’s strategic heavy industries have warned they risk being left high and dry by a lack of support in the government’s upcoming energy strategy, warning that failure to follow European countries’ measures to reduce gas and electricity costs will put UK businesses at risk. The government is expected to outline long-awaited proposals this week for a once-in-a-generation drive to invest in nuclear power and possibly more onshore wind and solar power, as well as approving continued North Sea oil and gas exploration. – Guardian
EasyJet cancelled more than 200 flights over the weekend with disruption expected to last into this week, leaving some passengers stranded amid travel chaos at some of Britain’s biggest airports. The airline blamed the problems on high levels of sickness among employees caused by Covid, with at least 222 trips axed since Friday. It said it had made efforts to offset staff shortages by rostering additional standby crew on the weekend but was forced to make “additional cancellations for [Sunday] and [Monday]”. – Guardian
Dairy farmers have held crisis talks in Brussels over soaring costs and supply chain disruption, as the industry warns the price of a pint will jump by 50pc. Rocketing costs from feed, fertiliser and fuel have stoked fears in the industry of a surge in milk prices not seen in decades. The cost of four pints of milk will jump from around £1.15 to between £1.60 and £1.70, an increase of up to 50pc, according to Kite Consulting, the UK’s leading adviser to dairy farmers. – Telegraph
A £5bn auction of Britain’s biggest petrol forecourt operator is in jeopardy amid fears the Government will intervene over concerns that private equity owners would jack up prices at the pumps. Suitors for Motor Fuel Group (MFG) are worried that ministers will order a competition inquiry into the sale of the business to protect households as they navigate the cost of living crisis, according to City sources. – Telegraph
City firms are sponsoring overseas recruits to come to work for them in the UK at the fastest rate since before Britain left the European Union, according to Home Office figures. About 200 foreign-based workers a week are being hired by British banks, fund managers, insurers and other City firms as the search for talent intensifies and as visa rules are relaxed. – The Times
The mood among consumers about their finances has fallen to its lowest level since the first Covid-19 lockdown, according to a new survey. Concerns about rising prices and the cost of living have pulled consumer sentiment down to -20 on an index tracked by PwC, the accountancy firm. This is a fall from +8 during the same period last year and is only just higher than the -26 reported at the start of the pandemic. – The Times
